January 24, 2023 | By Julia Tabisz
So far, Digiday+ Research has uncovered a lot of optimism among agencies this year: They think revenues will rise, that their clients’ ad spend will grow and that their companies will fare better than the overall industry.
But a Digiday survey of 79 agency professionals conducted in December found that agencies actually don’t anticipate significant growth in ad spend this year, even after most agencies increased services in 2022.
The percentage of agency pros who expect advertisers to spend more this year plummeted from last year, according to Digiday’s survey. This year, a little more than a third of respondents (39%) said they agree advertisers will spend more in 2023. That’s a big difference from 2022, when more than three-quarters (76%) said so. Meanwhile, the percentage of agencies who disagree that ad spend will grow in 2023 shot up to 38% from just 2% in 2022.
And, looking more closely at the data, the differences of note in this case don’t just fall in the middle (i.e. somewhat agree and somewhat disagree as opposed to strongly agree and strongly disagree), as they have with past surveys. This year, agencies expect differences in 2023 ad spend across the board — with results largely indicating an overall drop in ad spend this year.
For instance, last year, nearly a quarter of respondents to Digiday’s survey (23%) said they strongly agreed that advertisers would spend more in 2022. This year, that percentage fell to 6%. Meanwhile, the difference between last year and this year among agencies who somewhat agreed advertisers would spend more in the coming year is 20 percentage points: Last year 53% of agency pros said they agreed somewhat that advertisers would spend more in 2022, and only 33% said so this year.
On the other end of the scale, the percentage of respondents who somewhat disagree that advertisers will spend more this year saw a big jump over last year. More than a third of agency pros (37%) said they somewhat disagree that ad spend will grow in 2023, compared with just 2% last year.
Despite this somewhat gloomy forecast on 2023 ad spend, we already know that most agencies actually added to their full-time staff in 2022, and it turns out that many also added to their service offerings as well.
In fact, there wasn’t much of a change from 2021 to 2022 as far as the percentage of those who increased services: 62% of agency pros told Digiday they increased the number of services their companies offered in 2021, and a very comparable 60% said so in 2022. This is a very high number of agencies who said they grew their service offerings last year, despite the fact that they don’t expect nearly as much growth in ad spend for 2023.
There are some changes to note when it comes to agencies’ service offerings between 2021 and 2022. Specifically, the percentage of agencies who said they kept the number of services they offer steady (i.e. neither increased nor decreased services) rose from a third in 2021 to 41% in 2022. And — very surprisingly in the face of falling ad spend — zero respondents to Digiday’s December 2022 survey said their agency decreased the number of services they offer, either somewhat or significantly. In other words, not one agency pro chose either option that indicates their services decreased in 2022.
Digiday Top Stories
How gaming companies like Ubisoft want to expand screen adaption after the success of HBO’s The Last of Us
The rise of video game adaptations is certainly good news for major game developers. To learn how the Ubisoft is taking advantage of the recent explosion of interest in video game adaptations, Digiday spoke to Jason Altman, who has led the company’s film and television division since 2017.
Marketing Briefing: TikTok is making search a bigger focus, but marketers, agency execs say it’s early days
As some younger consumers are changing behavior and using TikTok as a search engine, marketers and agency execs say that it makes sense for brands to be early movers and find ways to stand out.
Why a declining economy could spur increased M&A activity in the mobile gaming industry
Smaller mobile gaming companies are likely to feel the squeeze of the recession earlier than the Zyngas of the world. Many rely on brands’ advertising dollars to stay afloat, and as those dry up, they are likely to turn towards acquisitions as a potential emergency exit.
Why the gaming industry might not be as recession-proof as once believed
During the 2008 financial crisis, many economists grew to believe that the gaming industry was “recession-proof,” with sales of video games far outpacing those of other retail products as the recession mounted in December 2007. Despite these encouraging signals, however, early signs seem to indicate that the gaming industry might not be as recession-proof as experts believed in the past.